NEW YORK, July 8 (Reuters) - American employers are keepingtheir fingers crossed that politicians will steer away from a"fiscal cliff" of major tax hikes and spending cuts in early2013, and, so far at least, have not gone back to a defensiverecession-mode.

Executives are prepared to reduce hiring or staffing if needbe, but they say they are counting on the U.S. Congress tostrike a last-minute deal.

"If they do go off the fiscal cliff, I'll immediately see my(sales) pipeline turn, and that's what we base our hiringdecisions on," said Stephen Gray, chief executive officer atGray Construction, an engineering, design and construction firmin Kentucky with 437 employees.

"But I don't see that bothering me until after it happens,"Gray said in an interview from Lexington. "That may be a problemon January 2nd."

Less than six months away, the threat of big tax rises andspending cuts scheduled for January poses a new risk to theeconomy and struggling U.S. labor market.

In Washington and on Wall Street, warnings about apotentially huge hit to growth are growing louder as electioncampaigning effectively blocks any new legislation until afterthe Nov. 6 poll.

The prospects for jobs growth in the rest of this year couldhinge on how seriously employers take the threat of Congressfailing to find a deal. Hiring was dismal for a fourth straightmonth in June, with non-farm payrolls expanding by just 80,000.

Last month, Federal Reserve Chairman Ben Bernanke said heexpected uncertainty related to the fiscal cliff "will have someeconomic effects" later this year, and referenced the confusionit can cause for companies with government contracts in 2013.

For now, U.S. companies are focused on the more immediatethreats from Europe's unfolding debt crisis and China's slowingeconomy. But 2013 looks particularly unclear.

Julie Brinkerhoff-Jacobs, president of landscape designcompany Lifescapes International, which has 46 employees, saidshe is scheduling a meeting with her accountant and attorneysoon to hash out tax implications from the fiscal cliff.

"My attitude is I want to know whatever the possibilitiesmight be," she said from Newport Beach, California. "We justneed to know whether we'll have enough cash flow, and what wehave to do to adjust."

On Long Island, D'Addario & Co, which makes guitar stringsand other music products and employs some 1,000 workers in theUnited States, is analyzing how possible government spendingcuts would hit sales to school music programs, which account forabout 15 percent of business.

The company is growing and has proven resilient to economicswings, but another recession would likely cause management tocut hiring or staffing, its president, Rick Drumm, said. "But wecan only control what we can control," he said. "We can'tcontrol Washington - hell, Washington can't control Washington."

POLITICAL PRECIPICE

On Jan. 1, 2013, Bush-era tax cuts are set to expire, $1.2trillion in automatic spending cuts begin - the price ofCongress' failure to seal a long-term fiscal plan last year -and the U.S. debt ceiling will need to be raised again. Thoseand other scheduled measures will probably need to be dealt within the lame duck session of Congress, after the election.

If lawmakers take no action, the economy would likely enterrecession in the first half of next year, contracting at anannual rate of 1.3 percent, according to the nonpartisanCongressional Budget Office.

"Once the election is over and people can put politicsaside, the leadership will emerge and they will do the rightthing," Hayes said at a conference last month. "Unfortunately,there is going to be a lot of uncertainty between now and then."

After the fight in Congress over the U.S. debt ceiling lastsummer - which cost the United States its pristine AAA debtrating - not everyone is convinced.

"I personally have no confidence in our politicians to getit right," Hamid Moghadam, co-CEO at real estate firm PrologisInc, said on a May conference call.

Whatever the political outcome, some believe employers willshow increased nervousness as the year advances.

"Our view is that they will slow the pace of hiring andinvestment in the second half of this year, causing growth toslow down," Bank of America economists wrote in a June researchnote. They expect U.S. gross domestic product growth to slow to1 percent by the fourth quarter due to a "major spike inuncertainty."

Questions over taxes and spending have caused some smallfirms to take steps t o protect their interests, said RichardCurtin, an economist at the University of Michigan who overseesa quarterly survey conducted by small businesses group VistageInternational. "This is a concern especially if you don't thinkthe same party is going to win both houses and the presidency,"he added.

"What I see among industry contacts is a lot of neutrality,"said Russ Williams, CEO of Archer>Malmo, an advertising andpublic relations firm in Memphis, Tennessee.

"I don't see anybody real optimistic or doing a whole lot ofhiring," he said. "But I also don't see anybody real pessimisticor cutting back drastically like we saw in the prior 36 months."